Posted: October 7, 2008, from the October 2008 issue of GCI Magazine.

Cleansing is still the primary purpose of bath and body products, but enhancing mood and offering a holistic at-home spa experience have also become key.

With limited growth potential, deodorant must be imbued with innovative scents, product efficacy or lifestyle identity to drive value growth.

Men are increasingly turning to body spray products as a fragrance and a supplement to standard perspiration-fighting deodorants.

Manufacturers of bath and body products are faced with both commoditization constraining unit prices and consumers who are far more willing to economize on toiletries than on products such as skin care and color cosmetics. Despite this, the bath and body market segment remains valuable. Sales of bath and body products—comprised of bath and shower products, deodorants and shaving products for both men and women—saw sales top $55 billion in 2007, accounting for almost 20% of global cosmetics and toiletries sales.

Emerging Regions Drive Growth

Greater economic stability brought high levels of growth in disposable income in Latin America—with Brazil, Argentina and Venezuela recording the strongest performances. Low-priced hygiene staples still outsell value-added products, however, this is beginning to change due to the shifting retail landscape—with pharmacies and parapharmacies* quickly expanding across the region. Parapharmacies, in particular, recorded rapid growth and are now present in almost every neighborhood—there are more than 56,000 parapharmacies in Brazil. Big retail chains—led by Onofre, Droga Raia, Drogaria São Paulo, Drogasil and Pague Menos—underwent major changes to offer more room for personal hygiene products, working in favor of products in the bath and body segment. Brazil and Mexico dominate sales, and manufacturers in both countries are looking to nurture a more sophisticated consumer by offering benefits, such as moisturizing formulations, that offer higher margins and can contribute to strong growth.

In Eastern Europe, there have been noticeable differences across the region. Russian and Polish consumers are becoming less price sensitive and more brand loyal, while Hungarian consumers are more price conscious due to the weaker economic situation. Throughout Eastern Europe, many consumers are ready to “overpay” for well-known names, and multinational brands such as Dove, Palmolive and Fa that have continued to be more popular than local brands.

One of the common features throughout the Middle East and Africa has been the shift among consumers from soap to shower gel products. The rising African middle class is a dynamic new consumer group revelling in its newfound wealth and splashing out on Western products that have been well beyond their reach for so long. For this reason, luxury nonessentials, are proving popular—with body wash/shower gels growing by more than 10% in 2007. Moroccans, for example, have become more willing to try new products and new body washes and soaps with additives such as argan oil and fruit extracts, and vitamins and aloe vera have seen sales boom. The Taous, Marsavon, Palmolive and Lux brands, notably, have benefitted.